Monday, April 30, 2012

Robert Samuelson Playing Anti-Robin Hood Again

In today's Washington Post, Robert J. Samuelson is at it again with a column called "The real Washington," in which he admonishes his readers for not realizing that we are a democracy and that the rich are paying for huge increases in aid to the poor, up from $126 billion in 1980 in real terms to $626 billion today, even while the suffering top income quintile are supposedly paying "70%" of federal taxes, poor things. He clearly decries this and thinks that aid to the poor along with his usual favorite target, Social Security, should if not be cut at least capped. The rich ae doing enough, more than enough, poor things, and here we are facing the "terrible threat of long term deficits," even though he only once manages to mention that "More promises were made than can be kept without raising taxes, which -- for the most part -- were also subject to bipartisan promises against increases." That this last remark is ridiculously lopsided should go without saying, but RJS is keen to maintain his position as a Very Serious Centrist.

Dean Baker does a good job on pulling some of this mess apart, pointing out how much income has concentrated to the very top of the income distribution, with RJS emphasizing the top 20% rather than the top 1% or top 1/10% - http://www.cepr.net/index.php/blogs/beat-the-press/the-power-of-the-rich-is-measured-by -their-income-not-just-their-taxes . Anyway, even looking at RJS's numbers, they are not as dramatic as they look. While indeed the top quintile does pay 67.2% of federal taxes (not RJS's apparently rounded off 70%), the same top quintile earns 53.4% of income. So, yes, indeed, the federal tax code is mildly progressive. But in fact it used to be more so than it is now. The average federal tax rate for that top quintile has been lower since 2001 than it was for any years since the end of WW II except for 1982 and 1983. This moaning about the poor rich on taxes just looks silly.

Furthermore, RJS's numbers overstate what has gone on regarding aid for the poor. Yes, indeed, it has indeed risen in real terms since 1980. But this increase is certainly overstated. The problem as almost always with RJS is that he ignores the outsize price increases in healthcare costs. His calculation of real payments seems to be deflated by the general CPI rather than the sector-specific ones. While from 1980 to 2010, the overall CPI rose 141%, the medical care one has risen 394%. The 1980 "real" number for Medicaid was about $60 billion, rising to $275 billion in 2011 out of the $621 billion for the poor. This seems like a massive increase, but when one corrects for the far greater increase in medical care costs than overall prices, the real increase in this is relatively modest, and this increase supposedly constitutes nearly half the overall increase.

While we are at it, expenditures on TANF have not risen since welfare reform, and the number of enrollees has barely budged during the Great Recession. This part of the system for helping the poor has been nearly useless in the recent crisis. I am glad that food stamps (SNAP) have been way up, but Samuelson is just missing it when he tries to paint a picture of the rich being snagged badly by a bunch of overcovered poor people (along with ignoring the skewing to the rich of the tax code, not to mention the role of rising medical care costs in the spending patterns).